Viking stadium funding solution requires patience on all sides

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May 3, 2013 at 1:32 pm

When the Minnesota Sports Facility Authority unveils the design for the new Minnesota Vikings stadium May 13, the public will get a glimpse of the grand edifice planned to be built over the next three years.

When ground is broken on the Metrodome site this fall, the public will know for certain that the $975 million stadium will be built.

What is less certain, however, is the funding of the stadium that was approved by the Legislature in 2012. For stadium fans, it will take patience to wait until 2016 when the facility is slated for completion. It will take equal patience from the public and legislators to feel comfortable that funding is available.

Much discussion has emerged over the lack of tax dollars flowing to the state from electronic pulltabs, one of the key pieces in funding the stadium. The second vital funding source from charitable gambling venues is electronic bingo. E-bingo is just now coming online.

Good reason exists for funding fears. E-pulltabs have not generated the funding once predicted by the Minnesota Charitable Gambling Board and the Board admits it. The state did not anticipate the snail’s process of establishing electronic pulltabs sites. Electronic bingo almost became a forgotten partner in the funding piece.

Many smaller charitable gambling sites have said no to electronic pulltabs. Some have identified start-up costs and fees, in addition to state taxes, as major roadblocks. Others say e-pulltabs wipe away the social fun a group of friends may have sifting through a stack of paper pulltabs. It may not be such with e-bingo.

The state was remiss in not identifying the electronic pulltab concerns early on. Such action may have helped lawmakers a year ago as the legislation was crafted. For stadium opponents, the door is now open for a barrage of criticism, including calls by lawmakers to redo the agreement with the Vikings. Fool’s errands of the like serve no good purpose. Those taking shots at the Vikings seem to ignore that the NFL club will pay an estimated $15 million a year to the sports facility authority, including $8.5 million in rent alone. Other user groups will contribute $2 million throughout the year.

State leaders from Gov. Mark Dayton on down have long preached patience as the funding mechanism for the stadium unfolds. We would agree that patience is needed, but faced with many unknowns, don’t assume the tax dollars from charitable gambling will somehow magically appear in the future.

But we give state leaders the benefit of the doubt that patience is needed through the end of this year.

Officials of the Gambling Board and the sports authority remain confident that the funding picture will see major improvements. The number of active charitable gambling sites offering e-pulltabs is growing and more game manufacturers and distributors are being approved by the state.

The same holds for electronic bingo, which could be a game changer.

And patience must be the rule based on the unknowns. It is still uncertain the extent of the first bond sale slated for late summer or early fall. The state continues to crunch numbers to determine if all or part of the financing bond is issued this year. That decision will determine the amount the state will need to re-pay next year. Early state estimates set debt service payments as high as $30 million a year.

Make no mistake about this. The bonds are backed by the state’s general fund and any shortage in stadium debt service must come off the top. Failing to do so would result in the state defaulting on its obligation.

The legislation approved last year includes back-up funding sources. A Minnesota State Lottery game earmarked for the stadium is projected to provide $3 million a year for bond support. Once the stadium is open, a tax on luxury suites would bring in another $2 million a year. A proposal removed from last year’s bill that called for a sales tax on sports memorabilia could have produced as much as $19 million a year depending on the extent of the tax.

The memorabilia tax is again being considered this session and should be passed if lawmakers want to hedge their bet. It amounts to a user fee that is paid by those closely associated with professional and Division I collegiate athletics.

Another factor that has received little attention is that state charitable proceeds are growing by 6 to 7 percent this year. The electronic games are certainly a factor here while paper pulltabs continue to sell well. While e-pulltabs are now projected to pull in $1.5 million in taxes this year, the total tax contribution from charitable gaming could top $7 million. With the e-games likely to grow, this estimate seems conservative.

State officials and lawmakers must remain vigilant in monitoring this process over the remaining months of 2013. By year’s end, a clear picture should emerge of the funding levels that can be expected from charitable gambling.

If red flags continue to fly, more serious action will be needed from legislators. Racino backers are ready to plug that hole with tax revenues generated by slot machines at Running Aces Harness Park. We taxpayers may not be off the hook yet.

Not surprisingly, funding for the stadium has become a hot button issue. It was controversial a year ago and will remain so. With the general fund at risk for a financial hit in 2014, now is no time for state officials to relax. They need to make sure the projections work.

What should not be forgotten is the many benefits from three years of construction that will produce 7,500 jobs and pump huge amounts of money into the economy. The end result will be a multi-purpose stadium with all the bells and whistles that will serve Minnesota well every month of the year and not just in the fall when the Vikings call it home.

An opinion from the ECM Editorial Board. The Record is part of ECM Publishers, Inc.